Before changing a development factor, diagnose the triangle
An unexpected age-to-age factor is a signal to investigate, not a complete explanation. Start with the data and the claims process.
Three directions to read
- Origin periods: differences in underwriting, exposure or initial loss mix.
- Development ages: settlement speed, reporting delays and tail behaviour.
- Calendar diagonals: inflation, operational changes or a claims-system conversion affecting several origin years at once.
A useful diagnostic pack
Show paid, incurred, case outstanding, claim counts and average claim amounts. Compare results with and without separately identified large claims. Document whether recoveries and allocated expenses are treated consistently. Reconcile the same valuation date across all exhibits.
Imagine incurred development accelerates while paid development barely changes. A change in case-reserve practice is one possible explanation; faster payment is another hypothesis that the paid data can challenge. Talk to claims colleagues rather than forcing both triangles to tell the same story.
Selection and communication
If recent factors are distorted, alternatives may include different averaging windows, segmentation or a method less dependent on immature experience. Record what changed, the reason, the impact on ultimate losses and what future observation would invalidate the selection.
The deliverable is not just a factor table. It is a reviewable chain from data issue to assumption to financial effect, with remaining uncertainty made explicit.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.